Australia’s overall construction work likely shrank in Q1 2016

Australia’s construction work overall is likely to have shrunk again in the first quarter of 2016. This would be the eleventh fall in thirteen quarters. The freefall in private sector engineering more than counters increases in building constructions. However, the decline is likely to be more moderate than it was in the fourth quarter, said Societe Generale in a research report. This implies a smaller drag on Australia’s GDP growth.

Private sector engineering is expected to have declined again as additional resource investment projects are finished; however, it is not expected to have declined as drastically as it did in Q4. Private sector engineering is expected to have dropped around 7% in Q1, added Societe Generale.

This will result in the component to fall by 18% y/y. This is not as bearish as the surveyed plans that project a drop in the order of 30% in FY2015/16. Meanwhile, public sector engineering is likely to have remained almost the same after growing for two consecutive quarters at the rate of 3.9% q/q each.

Building construction is likely to have grown further with the help of double-digit growth in residential construction, noted Societe Generale. Public investment in buildings is likely to have rebounded slightly after declining sharply in the past two years.